What are Bitcoins?

Before starting on bitcoin mining, it is important that we discuss bitcoins. Bitcoin is a form of digital currency that was created and is held electronically. Like other types of currency, bitcoins are not printed and no one controls them. Bitcoins are produced by people and they are increasingly been used in today’s world. They run on computers all over the world through software that can solve mathematical problems. It won’t be wrong to say that bitcoin is the first example of crypto currency.

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How Is It Different From Normal Currency

One important question that most of the people ask is that how is it any different from the normal currency. Bitcoins are used to buy things electronically but what sets it apart from the normal currency is that it is decentralized and there is no institute that controls the network. This is one of the reasons why people prefer it, because they know that their money is not controlled by a bank and it won’t be affected by any fluctuations.

Who Controls the Bitcoins?

Since the currency is decentralized, no one prints it and it is not controlled by the Central Bank. Bitcoins is not accountable to the population and it works on its own set of rules. The thing with normal currency is that a lot of times, banks produce a lot of money, so that they can cover the national debt. The end result of this? The currency ends up getting devalued. As opposed to that, bitcoins are created digitally and has a community of people that anyone can join. The bitcoins are mined with the help of a computer power in a distributed network.

What is the Limit of Bitcoins?

Users also have the flexibility to process transactions that are done with virtual currency. Bitcoins have their bitcoin payment network. This means that you can’t take out unlimited amount of bitcoins. The bitcoin works around the rule that miners can only mine 21 million bitcoins. However, the bitcoins can be divided into smaller parts. One hundred millionth of a bitcoin is known as Satoshi, which is the name of the founder.

How Were They Developed

The whole system was said to be developed by a software developer named Satoshi Nakamoto who proposed the idea of an electronic payment system that is based on mathematical proof. The whole point of bitcoins was to have a currency that would be without any central authority, would have low transaction fee and can be transferred electronically.

What Is Bitcoin Based On?

Conventional currency is based on silver or gold. Bitcoins, on the other hand, is based on mathematics and is used by people all over the world. People make use of a mathematical formula that produces bitcoins, and since the formula is easily available, anyone can have a look at it. Bitcoin came into existence on 31 October 2008 and it released its software in 2009. It is a peer to peer system and transaction takes between the people and there is no central authority that takes care of the entire thing or supervises the project. The transactions are, however, safe because they are verified with the help of network nodes and are recorded in a public ledger, known as block chain.

A lesser known fact is that bitcoins were created as a reward in a competition that allowed the user to use the computing power in order to verify as well as record the bitcoin transactions in the block chain. This activity is known as mining. People that mine successfully are rewarded with new bitcoins as well as the transaction fees. People also exchange bitcoins for services, currencies and products.

History of Bitcoins

Bitcoins came into existence in 2008 and since then their existence has been influenced by a number of different factors that has made it one of the most prominent currencies in the world. Did you know that more than 100,000 bitcoin transfers take place every day? It won’t be wrong to say that bitcoins have started resembling traditional financial services because of the following functions:

Exchanges (Coin base)

Payment processors (Bitnet)

Retail banking (Circle)

Here is a brief timeline of the history of bitcoins:

August 2008

In August 2008, three people, Neal Kin, Vladimir Oksman, and Charles Bry worked on the application of the whole process and clearly stated that they had no connection to Satoshi Nakamoto, who is said to be the originator of the idea of Bitcoin. The trio registered Bitcoin.org in the same month with the help of anonymousspeech.com that helps people to buy domain names anonymously.

October 2008

Satoshi Nakamoto released evidence that he came up with the idea of peer-to-peer version of electronic cash. He solved the issue of being copied and gave a foundation to the whole concept of Bitcoin.

January 2009

Genesis that allowed mining to happen was launched and later in the month, the first transaction took place between Hal Finney, who was a developer, and Satoshi.

October 2009

The New Liberty Standard was established to give value to bitcoin that was $1 = 1,309 BTC. The equation helped in taking into consideration the cost of electricity used to create the bitcoins.

February 2010

Bitcoin market was established.

May 2010

A milestone was achieved when a programmer called Laslo Hanyecz in Florida sent 10,000BTC to a volunteer in England who had spent $25 to get Hanyecz, a pizza from Papa John’s. You would be surprised to know that the pizza is priced at £1,961,034 today.

August 2010

Bitcoin was hacked that led to the generation of 184 billion Bitcoins that made the value of the coin drop from $1 to $0.80.

October 2010

After the hacking episode, Bitcoin said that it can help in the fight against finance terrorist groups.

November 2010

Another milestone was achieved when Bitcoin reached $1 million and the value changed to $0.50/BTC.

January 2011

A drug marketplace was established and Bitcoin was used to buy and sell drugs online.

February 2011

Bitcoin was at par with the US dollar.

June 2013

A theft took place when a user said that 25,000 BTC were stolen from his wallet that was worth $375,000. This led to a crash of the currency from $17.51 to $0.01 per Bitcoin.

March 2013

First bitcoin regulation was issued by the US Financial Crimes Enforcement Network (FINCEN). The regulation consisted of a guidance report for the use and exchange of the currency. In the same month, the market capitalization reached $1bn.

August 2013

It was said that Bitcoin can be used as money and to buy goods and services by Federal Judge Mazzant. Bloomberg began testing the Bitcoin data that gave it legitimacy.

November 2013

The bitcoin price rose to $700 and the Senate had its first meeting about digital currency. The Federal Reserve Chairman, Ben Bernanke, was OK with the use of bitcoins. Bernanke in a letter wrote “may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system”.

December 2013

The Central Bank of China stopped the financial institutes from handling biotin transactions because it was not a real currency and so did not have the same status as fiat currency. Today, things have changed and almost 80% of the bitcoin transactions take place in China.

January 2014

Bitcoin had the first insured storage unit and the first major online retailer to accept payments was Overstock.com.

February 2014

Bitcoin was classified as asset by the HMRC and that meant VAT could not be charged on it.

June 2014

More than 29,000 bitcoins were seized from the Silk Road by the US government that helped it to get legitimacy.

July 2014

The first draft of proposed rules for regulating virtual currencies was released by the New York State Department of Financial Services. In addition to this, the European Banking Authority also gave its opinion about the virtual currencies and said that such exchanges were obliged entities that must be complied. Shortly after this, Global Advisors Bitcoin Investment Fund launched the first Bitcoin Investment Fund that gave security and encouraged investors to invest.

August 2014

The Chancellor of the Exchequer, George Osborne gave positive remarks about bitcoin and purchased £20 worth of bitcoins.

October 2014

TeraExchange said that the first bitcoin transaction had taken place that added a new dimension to the whole idea.

December 2014

Microsoft started accepting bitcoin as a form of payment.

January 2015

The New York Stock Exchange invested in bitcoin.

March 2015

The result of UK treasury’s call for digital currency was announced.

How do Bitcoins Work

At this point, you must be thinking, how does bitcoin really work? If you are new to it, you would be pleased to know that you can get started without learning about the technical details. The first thing you need to do is install the bitcoin wallet on your desktop or on the mobile phone and it will help you in generating bitcoin address that you can generate again if the need arises. You can tell the email address to your friends when they pay you or when you have to make a transaction. This is much similar to an email, but the bitcoin addresses can only be used once.

Balances – Block Chain

Block chain is a shared public ledger that the Bitcoin system relies on. The transactions that get confirmed are a part of the block chain. The bitcoin wallet has a look at the balance that can be spent and the new transactions are verified as spending bitcoins that are owned by the spender. Cryptography is used to arrange the block chain in a chronological order.

Transactions – Private Keys

Transaction, just like any other, is the transfer of value that takes place between the Bitcoin wallets that become a part of the block chain. Bitcoins have a secret place for data that is known as seed or the private key that are used when a transaction is made, because it is a proof that it is made from the owner’s wallet. A signature is also required that gives added security because it stops the transaction from being altered by anyone else after it has been issued. All the transactions are broadcasted between the users, they are confirmed by the network in 10 minutes through a process called mining.

Processing – Mining

Mining is defined as a distributed consensus system that is used to confirm the waiting transactions and by including them in the block chain. It helps in reinforcing a chronological order in the block chain that helps to protect the neutrality of the network. This allows the computers to agree on the state of the system. In order to be confirmed, all the transactions are packed in a block that has to abide to the cryptographic rules verified by the network. These rules are important as they stop the previous blocks from being modified because if that happens, it will invalidate all the blocks that will follow. Mining creates something like a competitive lottery that stops the individual from adding new blocks to the block chain. This way, individuals don’t have the power to control what is included in the block chain and neither can they remove the part for their own spends.

This is a small summary in order to give you an idea about the whole system. Here are some of the frequently asked questions that will help you to learn more about the topic.

What are Bitcoins?

Bitcoins, also known as crypto currency, are electronic currency. It is digital public money that has been made with the help of mathematical computations and is looked after by users that are known as miners. Bitcoins are converted into codes that have monetary value.

How Do Bitcoins Work?

Bitcoins are virtual coins that are not controlled by an entity. If you have bitcoins, you have something of value that you can trade in to get the goods and services that you seek. You can either spend your bitcoins or you can save them if you think their value will increase with the passage of time. Bitcoins are traded from what is known as a ‘wallet’ to another one.

What is a Wallet?

Wallet in the bitcoin world refers to a personal database that can be stored in your phone or desktop.

Who Makes Bitcoins?

Bitcoins can be mined by anyone who knows how to work around computers as it is done with the help of a self limiting phenomenon called mining. The reason why it is self limiting is that in totality only 21 million bitcoins can exist and out of these 11 million have been created and are used in transactions.

Bitcoin is a whole process that involves giving command to the home computer so that it can work around the clock and solve proof of work problems. Each bitcoin has a math problem that consists of 64 digit solutions. On an average, it takes two to three days to solve a bitcoin that too if the desktop works non-stop. In order to mine the bitcoins, you need to earn 50 to 75 cents after subtracting the electricity costs. If someone is an expert miner and they have powerful computers working, they can earn up to $500 after subtracting all the costs.

Small scale miners don’t tend to earn that much because they are more likely to spend in electricity than they would earn in bitcoins. Bitcoin mining can only be profitable if the person has several computers running and join a group of miners that can combine the hardware power. The hardware requirement is an important security measure that needs to be taken, so that people don’t manipulate the Bitcoin system.

How Secure Are Bitcoins?

In order to understand how secure they are, take the example of a precious metal. If you have precious metals, you will be taking several precautions in order to make sure that they remain safe. Similarly, users need to take appropriate measures that will prevent hackers from getting access to their personal cache. The bitcoin wallet is stored online with the help of a cloud service or offline with the help of a USB stick. The offline method is much more secure and is recommended for people that have more than one bitcoins.

One of the real risks is posed when a person fails to back up the wallet with a failsafe copy. Every time you make a transaction, you need to update a .dat file and that needs to copied and stored somewhere as a duplicate backup when you do bitcoin transactions.

How Much Are Bitcoins Worth?

The worth of one bitcoin is $450 USD and currently there are around $1.9 billion USD worth of bitcoins in use, and $2 billion can be created. Currently only 11 million bitcoins exist and the limit is set at 21 million coins that will be reached sometime around 2040.

What Is a Bitcoin Made of?

Bitcoin is made of simple data ledger called the block chain. The size of block chain is small and is somewhat similar to a long text on the phone. A bitcoin block chain has three parts. Two parts are extremely easy as it involves identifying the address that consists of 34 characters as well as knowing the history of the ledger, that is who made and sold it.

The most complex part is the third one that is referred to as the private key header log. The header is a digital signature that is used to confirm that the transactions were made for a particular bitcoin file. All of the digital signatures are unique to every user and their bitcoin wallet. The signature gives security to the bitcoins and every single trade of the bitcoin is tracked, is publicly disclosed, and has the signature of the participant attached to the bitcoin block chain that works as a confirmation. The digital signatures are given time to be confirmed and once that happens, the transactions can’t be duplicated and the bitcoins can’t be forged by people.

It is important to know that bitcoin has the address of every bitcoin wallet that it touches but the names of the individuals that own the wallet is not recorded. This, in layman terms, means that the bitcoin transactions are confirmed but they remain anonymous at the same time. The bitcoins are stored in the device of your choice but the history of the bitcoin that you own is stored in the bitcoin network and all the users can view every bitcoin’s history.

Who Oversees and Regulates Bitcoins?

Bitcoin currency is not regulated or controlled by anyone. Since it is decentralized, there is no bank that controls the entire thing. The currency remains self contained, which means that no precious metals are involved behind the bitcoins and the value of each bitcoin is within itself. Bitcoins are looked after by miners that are a network of people having personal computers used for the bitcoin network. Miners act like a swarm of ledgers and auditors for the transactions. Miners are paid for the accounting work by earning new bitcoins that they get based on their contribution to the network.

Can People View the History of Bitcoin Trading?

People can’t view your personal identity but they can have a look at the history of your wallet. The reason for this is to add transparency to the entire thing so that the bitcoins can’t be used for illegal things. The bitcoin transactions can be seen at the block chain info.

Is There a Fee Involved To Use the Bitcoins?

A small fee is involved to use the bitcoins. There is no banking fee involved with bitcoins because it is not centralized and there are no banks involved. What you do is that you pay a small fee to the bitcoin services that include the following:

The servers that support the entire network that the miners work on.

The online exchange that helps to convert the bitcoins to dollars.

The mining pools that you become a part of.

The owners of some of the servers will have a onetime transaction fee that will mount up to a few cents overtime someone will send you money across their nodes. You will be charged when you will convert your bitcoin for dollars. Most of the mining pools charge 1% support fee from the users that join their pools. In addition to this, there are other transaction costs involved as well such as pool donations and transaction fees that are cheaper than conventional banking.

Can Bit Coins Be Forged?

No, bitcoins can’t be forged. The reason is that it is not financially viable to manipulate the system because there is no profit involved.

Why Are Bitcoins So Controversial?

There are some reasons as to why bitcoins gained popularity. From 2011 till 2013, a lot of criminals made bitcoins just so they can have millions of dollars and keep it away from the law enforcement agencies. This is one of the reasons why the value of the bitcoins rocketed to $1000 per coin before it settled to its current price. Bitcoins became controversial because they were not regulated by the central bank and the power was given to the general public. So, the bitcoins were beyond financial institutes and no middle banks are needed to keep the bitcoin system going.

Can Bitcoins Be Abused?

Yes, they can be abused in the following ways:

Technical Issues

If there is a delay in confirmation, it can be an issue because in some instances, the bitcoins can be double spent during the confirmation period. The bitcoin transfer takes place peer to peer so it can take a few minutes for the transaction to be confirmed. These few seconds are very crucial as a scammer can use fast clicking and can submit another payment for the same bitcoins to a different recipient. The system will be able to catch the double spending and will cancel the second transaction. However, if the second recipient transfers the goods to the buyer before they get the confirmation, they will end up losing the good as well as the payment.

Dishonesty

Another way bitcoins can be misused is if the pool organizers take unfair share. Bitcoin mining is achieved with the help of pooling in which a user joins the group of other miners and then the organizers of the pools get the privilege to choose how to divide the bitcoins that are discovered. So, if the organizers are dishonest, they can keep more shares for themselves.

Mismanagement

Another way of bitcoin abuse is through mismanagement. One of the biggest examples of this is Mt. Gox. So it is important to keep into account that the people that run the online exchanges and get cash for bitcoins can be fraudulent. This time of dishonesty is rampant in other areas as well; however, one of the differences is that if it happens in a bank, they are partially insured, whereas due to a lack of central authority, bitcoins does not have an insurance coverage.

What is the Hype When It Comes to Bitcoins?

Here are some of the reasons as to why bitcoins are hyped about:

Aren’t Controlled or Regulated

What sets the bitcoins apart is that they are not regulated by the central bank or by the government. Since there is no authority involved, government as well as the tax agencies can’t track the money. It is said that changes might take place in few years because unregulated money is not safe. There have been instances when bitcoins have been used for money laundering. Due to this, the price of the bitcoin surged upwards because scammers were purchasing the coins in large quantities.

They Bypass Banks

Again, there is no middle authority that would regulate the procedure, as all the transactions take place peer to peer. Users have wallets that can’t be seized by banks and neither do they have a withdrawal limit imposed on them.

They Are Irreversible

All the conventional methods of payments like bank draft, credit card charge, personal check, and wire transfer come with the possibility that the payment can be reversed by the banks involved. However, this flexibility does not come with bitcoins because once you make a transaction it is final. Similarly, you are not covered by insurance which means that if you forget the password to your wallet or lose the hard drive data, all your content will be gone forever.

They Are Changing the Way We Look At Our Finances

Bitcoin is a completely new phenomenon changing the way we handle our finances. Since the world started printing, the authority to handle the finances was given to different banks. These banks are responsible for printing storing, and moving our virtual money. In addition to this, we are charged for the services of the middlemen. It is a known fact that when the bank needs money, they can print more and this has been abused by banks because the paper money that we have are basically checks that promise to have some value but there is no gold to back it up. Bitcoins give the power to individuals to control their own money. Bitcoins are not paper pieces that promise to have some value. Instead, they are complex packages that have immense value.

Characteristics of Bitcoins

This chapter will help you in understanding, how bitcoins work as a medium of exchange and as a store of value. Let’s have a look at some of the characteristics of bitcoin and compare it to fiat as well as gold:

Scarce

Money is scarce because it can’t be easily recreated.

Fiat- This can only be created by a small number of people that create a limited supply. Except in extreme cases of inflation, scarcity of fiats holds up well.

Gold- Gold is precious and is not easy to find, but it is still easily available in the markets.

Bitcoin- Bitcoin is controlled and most of the times it is highly predictable as well. Even if we take into account some margin of error, the bitcoin can be forecasted for at least a hundred years. The 21 million bitcoin unit should be more than sufficient for large amounts of trade.

Durability

In order to function well, the currency should not devalue with the passage of time. Earlier on people used to have the barter system but most of the times; they used to exchange cattle and eatables that expired after a while.

Fiat- Paper money is not ideal to use for the long term because it can degrade with the passage of time. However, it is important to take into account that worn out money can be easily replaced, so the actual value is not destroyed.

Gold- Gold bars are extremely long lasting. Even though the metal can get a little tarnished, the metal will not degrade and will retain most of its value.

Bitcoin- Since bitcoin is digital it does not degrade with use and can be duplicated in order to avoid file corruption.

Portable

Currency needs to be portable son that it can be used for everyday transactions and can be carried by a person.

Fiat- This is great for everyday purchases as you can easily store it in your wallet. However, for bigger transactions, more security measures are needed for added security.

Gold- Gold is quite heavy and it can’t be easily carried around.

Bitcoin- Bitcoins work great for large quantities because even the biggest of amounts can fit in a USB. In addition to this, bitcoins can be easily transferred to anyone with the help of a stable internet connection.

Divisible

One important quality that currency should have is that it should be divisible, which can be achieved by having different denominations of money. This is one of the reasons why most of the items can’t be used as currency because they can’t be divided into smaller portions.

Fiat- There are so many denominators of fiat. One of the reasons why it is printed on paper is that it is easy to divide it.

Gold- Dividing gold is easy but the process is very complex.

Bitcoins- Bitcoins can be divided up to 8 decimal places and it can be extended more. This means that if you have $1, you can divide it to $0.00001.

Authenticity Verification

In order to be more reliable, money needs to be easily identified as well as verified

Fiat- People identify with money and they know how it functions because if experience.

Gold- In order to see the quality of gold, you need to be trained. In order to see the authenticity of the metal, several tests are done.

Bitcoin- Bitcoin is not recognized by people because it is not tangible and software needs to be used in order to identify the block chain that needs a lot of expertise and knowledge.

Storage

In order to function as a store of value, it is important to store in large amounts. Some of the objects are hard to store because they will lose their value.

Fiat- It can be easily stored but a proper infrastructure is required for this.

Gold- It is not feasible to store gold because it would require an expert infrastructure for that.

Bitcoin- Bitcoin can be stored because the block chain can grow bigger with time. Backing up files can reduce the risk of error as well.

Fungible

The units of money should be equivalent and should be replaceable.

Fiat- All the values are equal and people don’t look at the serial number to determine the value.

Gold- Gold bars need to be examined constantly to see if they are genuine or not.

Bitcoin- Bitcoins are all equal.

Widespread Use

The currency should be easy to use so that goods and services can be bought.

Fiat- It can be used without any issue. Most of the currency can’t be used outside its geographical boundaries but it can be exchanged.

Gold- In today’s world, it is rare to buy something in exchange of gold.

Bitcoin- It only accepted by very few websites but its acceptability is growing at a fast rate.

Difficult to Copy

The currency needs to be reliable in nature and it should be hard to copy. When people get the currency, they should be absolutely sure of its reliability.

Fiat- Counterfeit is high with fiat and government constantly takes steps to overcome this issue.

Gold- Although it is hard to copy gold, there are instances where people had sold bars that were filled with lead. This is one of the reasons why chemical tests are done to see the authenticity of the metal.

Bitcoin- It is not easy to copy a bitcoin thanks to cryptology. The only way bitcoins can be misused is if someone attempts to double spend the bitcoins, but such instances are very rare.

Bitcoin is still new for the people and they are exploring its characteristics. One common complaint about it is that the price is extremely volatile but the advantages are that you have a solid history and you are not regulated by anyone.

Learning about Bitcoins

People are curious about bitcoins as for them this is a new concept and is extremely different from paper money. Earlier on, the society had barter system that evolved into exchange of gold and silver that turned into paper money, which has now taken the form of digital money.

By now you know that bitcoins are electronic money that is decentralized and is not looked after by any Central Bank. It was created in 2009 by Satoshi Nakamoto Dorian and helps people to buy goods and services just like fiat money.

Usability and Functionality of Bitcoins

Bitcoins are used as a medium of exchange. Some of the important features of crypto currency are:

Send It Anywhere

You can send bitcoins anywhere in the world without any charge. This means that you don’t have to convert the currency and then pay the corresponding fee. In addition to this, it is extremely fast and effective.

It is Safe

You can retain your anonymity as the sender or the receiver. In order to do the transaction, all you need to know is the address of the bitcoin wallet receiver. This is great because you don’t have to give your personal information like bitcoins or the postal address.

It is Fast

The transaction is extremely quick, which means that at the end of the transaction, the receiver will be able to see the amount left in your wallet. The whole process takes only a few seconds and depends on the volume of the transactions that are occurring at that time.

They are Universal

Bitcoins are accepted all over the world and you can do the transaction without the need for any foreign exchange transaction.

They are Irreversible

Bitcoins transfer can’t be reversed, so if you have already done so, there is no looking back.

Advantages and Disadvantages of Bitcoins

Bitcoins Are Limited

Bitcoins that are available in the market are very limited and according to the rules, there can’t be more than 21 million bitcoins. It is said that the limit will be met with in 2140. As of now in 2017, there are 11 million bitcoins in the market.

Price Volatility

The prices of the bitcoins are really volatile and it highly depends on the supply and demand. This results in a self regulation of bitcoin prices, which will depend on users, so that the bitcoins are not exploited.

Property of the Owner

Bitcoins are the sole property of the owner and no can speculate with them except them.

They are Long Lasting

Since bitcoins can’t be destroyed, they are long lasting and their value will not depreciate nor will they disappear.

You Can’t Fake Them

Fiat money can be easily faked but that is not the case with bitcoins because the dynamics on which they are based on, simply can’t be faked.

Illegal Activities

A lot of illegal activities used to take place with bitcoins since they are anonymous. Most of the illegal businesses as well as mafias were using them but certain regulations have made that impossible now.

There is Minimum Cost Attached to Them

It is not easy to transport physical money but that is not the case with bitcoins. Since bitcoins are virtual in nature, there are no costs that are related to transport.

No Maintenance

The costs associated with bitcoins are extremely low and there is no maintenance or overhead costs.

How to Get the Bitcoins

There are many ways through which you can get the coins, some of which are completely free of cost whereas there are others that will require an investment. You can go to the websites used to promote bitcoins as their purpose was that anyone in the world can get its first free satoshis. Another and a more preferred way is to mine the bitcoins. Mining is a very important part of the bitcoin world. Bitcoin mining helps in the connection of different computers that have a high processing power (ATI) with the help of mathematical algorithms that discover a series of codes, which results in the discovery of new bitcoins. An analogy is used for bitcoin, which is why it is said it will be 2140 when the last bitcoin will be issued.

Buying, Selling, and Exchange

There are several pages dedicated to bitcoins, and you can get the bitcoins exchanged for a small commission.

Owning Bitcoins

Bitcoins are stored in a digital wallet that is located in the user’s computer or on a cloud. The wallet is like a virtual bank account that allows the users; anyone can create their own crypto currency. The creator of bitcoin introduced something to the world that was never seen before. Since the creation of the coins, new criptomonedas are being used in order to improve the bitcoin system. Bitcoins have gained a lot of popularity and are now a part of our everyday economy. Since they are now publicly traded, there are bitcoin ATMS as well and there are debit cards that are linked with bitcoin exchange which helps the users to purchase with the card.

According to the stats, there are over 700 criptomonedas, and each of them have a special kind of value as well as specific characteristics. Currently, the top five are:

Bitcoin (BTC)

Ethereum ( ETH)

Steem (estimated)

Wave (XRP)

Litecoin (LTC)

We are now a part of a world that may start functioning without the help of paper money and maybe the already existing payments methods will have to accommodate these changes as well. Since bitcoins are gaining a lot of popularity, large corporations will also become a part of the social trend and who knows, they might also start creating criptodivisa that would be accepted all over the world. We are approaching an economic model that will accommodate bitcoins, so it is a good idea to learn all the details about it.

How to get Bitcoins

One of the most commonly asked questions is how to get the bitcoins. One of the easiest ways of getting them is with the help of a credit card. You will be spending less than $50 and will get hold of the bitcoins within 10 minutes.

Buying Large Amounts of Bitcoin

In order to purchase large amounts of bitcoin, the following steps have to be followed:

Locate a bitcoin exchange

Get the bitcoins exchanged in lieu of your local currency

Transfer the bitcoins to your wallet

Get the bitcoin debit card so that you can spend easily

Learning to use bitcoin is just like using any other currency; just learn the basics and you will get hold of the whole thing in no time.

Steps To Getting a Bitcoin

Step 1: Get Started With Bitcoin

Bitcoin has been functional since the past eight years. So there are a few things to know about bitcoin

They are decentralized and therefore, do not need any intermediaries and is based on the concept of P2P, which means that no third party will be involved.

All the bitcoins are saved in a virtual wallet.

Bitcoins can be further divided into satoshis and 1 satoshi is equals to 0,00000001BTC.

Block Chain has the history of all the transactions and the log is public, which means anyone can see it.

Bitcoins are known as crypto currency because they make use of algorithms as well as mathematics.

In order to be confirmed bitcoin transactions need to be confirmed at least once.

Bitcoin is not anonymous.

Bitcoin’s value depreciates and appreciates just like normal currency.

The bitcoin industry keeps evolving in order to stay up to date.

Step 2: How To Get A Bitcoin Wallet

Setting up the wallet is very simple. Some of the ways are:

Using a mobile wallet like Airbitz, Breadwallet, and Mycelium.

Get bitcoins from a friend in lieu of a good or service or as a form of exchange.

Armory can be used to store large amounts of bitcoins safely.

Best Mobile Wallets

The most popular mobile wallets available in the market are:

Copay

Airbitz

breadwallet

Best Bitcoin Software Wallets

The software wallets can be downloaded to the computer and will give more control to you. Some of them are:

Armory

Bitcoin Core

Best Hybrid Bitcoin Wallets
The hybrid wallets give you control of the private keys and is easy to use. If you are looking for a good option, you can consider Copay.

Best Bitcoin Web Wallets

Web wallets are very convenient to use but they may be a little less secure. Again, Copay is a good option.

Best Bitcoin Hardware Wallets

Some of the options that you can consider are:

OPENDIME Review

OPENDIME

Ledger Wallet Review

Ledger Wallet

Step 3- How To Get Bitcoins

How to buy Bitcoins

The bitcoin price tends to be extremely volatile so people tend to get more of them. Some of the best exchanges are:

Indacoin

This is a global platform that is in more than 200 countries that needs no registration and can be accessed with the help of credit and debit cards.

Kraken

This is another famous bitcoin exchange located all over the world

How To Earn Bitcoins

A lot of people accept bitcoins as a form of payments for the product and services that they have offered. If you want to do the same, you need to sign up with a bitcoin merchant which will allow you to send invoices.

WeUseCoins Bitcoin Faucet – To get free bitcoins

BitPay – Fir merchant tools and services

Jobs 4 Bitcoin

What Is Bitcoin Mining?

Bitcoin mining requires bitcoin mining software that has been designed to process the double round sha256 hash verifications at high speed. Getting started with bitcoin can be a little tricky, so make sure that you have a lot of information before you get started.

Step 4: How to Use Bitcoins?

Using bitcoins can be very exciting because it is a new technology and can be used to purchase any goods and services.

Bitcoin Merchant Directories

Here are some of the top merchant directories:

Purse.io – this can help you in getting a discount

Open Bazaar – this is a decentralized marketplace.

Coinmap – this is also used to find merchants near you

Airbitz- this is used to find merchants that are located near you.

Another tool that can be used is the bitcoin debit card, which allows people to load a debit card with bitcoins.

Promotional Images

If you are a merchant who wants to accept goods and services then the following high resolution graphics can help you out:

Full PSD

168 pixels – Small for website buttons

1,680 pixels – High resolution

If you want to purchase gifts with the help of bitcoins, you can get it from Gyft and spend it at Amazon. Similarly, if you want to donate, you can get in touch with BitGive as they accept charity from the bitcoin community.

Step 5: Staying Informed With Bitcoin News

If you want to purchase bitcoins, it is recommended that you stay updated with bitcoin news to know what is happening in the market. The best sources to do so are:

Steemit

Research Library

r/bitcoin

Opinions of the Rich and Famous on Bitcoin

Bitcoin Knowledge Podcast

Bitcoin Charts

What Makes For the Best Bitcoin Exchange

A number of factors have to be considered when finding the best bitcoin exchange for trading the bitcoins, which vary from person to person for the following factors:

Exchange Rate

How close the exchange rate is to the global average price found on the index. You can compare the bitcoin’s exchange price to the bitcoin price index in order to get the best bitcoin exchange rate.

Payment Method

You will have to find an exchange that will accept your payment. Different payment methods have different fees, so do your research before opting for one.

Speed

Purchasing bitcoins can be extremely challenging especially if you want them in large amounts. Sometimes locating them can be a tedious project because the verification process can take up to a week. However, the purchases is instant, so just make sure that you calculate the verification level and the delivery speed before purchasing anything.

Amount

There are different buying limits with each bitcoin exchange which tends to vary according to the level of identity verification.

Fees

Different bitcoin exchanged have different fees for their services Most of the brokers sell their bitcoins directly to the buyer and charge a flat rate of 1% per transaction. If you want information regarding the fees, you should find the information on the website’s exchange.

Privacy

All the exchanges that accept credit cards as a form of payment are required by the law to have information about the identity of the user. Purchasing bitcoins with cash is the best way to buy bitcoins whether it is through Bitcoin ATM or Local Bitcoins.

Regulatory Compliance

If you want bitcoins, you have to get it exchanged with bitcoins. In this process, the user has to trust the bitcoin exchange that they will not run away with their money. In order to avoid fraud, it is highly recommended that people opt for a regulated bitcoin exchange. Most of the exchanges list all the information about their regulatory compliance on their website, so if a website does not do so, it’s better to stay clear from them.

Buying Bitcoins All over the World

Here are some of the ways through which you can buy bitcoins in different countries: Let’s have a look at some of the countries.

Buy Bitcoins in the United States

Some of the best ways to buy Bitcoins in the United States are:

BitPanda Buy

BitQuick Buy

Coinbase Buy

CoinMama Buy

Indacoin Buy

Kraken Buy

LocalBitcoins Buy

Remitano Buy

Wall of Coins Buy

Buy Bitcoins in the United Kingdom

Some of the best ways to buy Bitcoins in the United Kingdom are:

BitPanda Buy

Bittylicious Buy

Coinbase Buy

CoinMama Buy

Indacoin Buy

SpectroCoin Buy

SpectroCoin Buy

Buy Bitcoins in Canada

Some of the best ways to buy Bitcoins in Canada are:

BitPanda Buy

Coinbase Buy

CoinMama Buy

Indacoin Buy

Kraken Buy

QuickBT Buy

SpectroCoin Buy

SpectroCoin Buy

Buy Bitcoins in South America

Some of the best ways to buy Bitcoins in South America are:

Bitcoin Peru Buy

Bitex.la Buy

BitPanda Buy

CoinMama Buy

GuaraniBitcoin Buy

Indacoin Buy

LocalBitcoins Buy

SatoshiTango Buy

SurBitcoin Buy

SurBTC Buy

Buy Bitcoins in Mexico

Some of the best ways to buy Bitcoins in Mexico are:

BitPanda Buy

Bitso Buy

Chip-Chap Buy

CoinMama Buy

Indacoin Buy

LocalBitcoins Buy

Buy Bitcoins in Asia

Some of the best ways to buy Bitcoins in Asia are:

BitFlyer Buy

BitKan Buy

BitoEX Buy

BitPanda Buy

BitX Buy

BTCC Buy

CoinHako Buy

CoinMama Buy

Coinplug Buy

Coins.co.th Buy

Coins.ph Buy

Huobi Buy

Indacoin Buy

Korbit Buy

LocalBitcoins Buy

MaiCoin Buy

OKCoin Buy

Unocoin Buy

Urdubit Buy

Buy Bitcoins in Australia

Some of the best ways to buy Bitcoins in Australia are:

BitPanda Buy

BTC Markets Buy

buy-aBitcoin Buy

CoinMama Buy

HardBlock Buy

Indacoin Buy

LocalBitcoins Buy

Remitano Buy

Buy Bitcoins in Brazil

Some of the best ways to buy Bitcoins in Brazil are:

Bitex.la Buy

BitPanda Buy

CoinMama Buy

FoxBit Buy

Indacoin Buy

LocalBitcoins Buy

Mercado Bitcoin Buy

Buy Bitcoins in Germany

Some of the best ways to buy Bitcoins in Germany are:

Bitcoin.de Buy

BitPanda Buy

Cashila Buy

Coinbase Buy

Coinhouse Buy

CoinMama Buy

Indacoin Buy

Kraken Buy

LocalBitcoins Buy

SpectroCoin Buy

SpectroCoin Buy

Buy Bitcoins in France

Some of the best ways to buy Bitcoins in France are:

Bitcoin.de Buy

BitPanda Buy

Cashila Buy

Coinbase Buy

Coinhouse Buy

CoinMama Buy

Indacoin Buy

Kraken Buy

Paymium Buy

SpectroCoin Buy

SpectroCoin Buy

Buy Bitcoins in Africa

Some of the best ways to buy Bitcoins in Africa are:

BitPanda Buy

BitPesa Buy

BitX Buy

CoinMama Buy

Indacoin Buy

LocalBitcoins Buy

NairaEx Buy

Buying bitcoins is risky, so please purchase and use them at your own risk. The above mentioned companies were found to be reliable and are listed as a convenience. It is recommended that you do your own research before purchasing from them.

Where You Spend the Bitcoins

Here are some of the places where you can spend the bitcoins that you have earned:

University Of Nicosia, Cyprus

They have announced that they will start accepting Bitcoin as a payment for their tuition fees. They will be the first university to do so.

Young Pioneer Tours

They are a budget group that offer tours in North Korea and other parts of the world. Their prices are listed on their website, where it states that they accept Bitcoin.

Coin Map

This is a network of more than 900 Bitcoin friendly businesses all over the world that also consists of cafes, restaurants, as well as bakeries.

The Swiss Pharmacy

The Swiss Pharmacy accepts transitional currency as well as Bitcoin.

BitPremier

This is a Bitcoin only marketplace that includes everything you can think of.

All Things Luxury

It has a selection of jewelry that you can buy with Bitcoin.

Wholly Hemp

They make skin care products and around 25% of their proceedings go to charity. You can pay with Bitcoin at the time of checkout.

CheapAir

Now can book flights and hotels with CheapAir and pay with Bitcoin.

TravelForCoins

They work as the middle man, so you pay them in Bitcoin and they will pay for your flights using standard currency.

Gyft

You can get digital gift cards from several brands that include Sears, Target, and Amazon by paying in the form of Bitcoin.

BitcoinCommodities

It sells gold and silver points that you can buy with Bitcoin.

BitBrew

It offers coffee to its customers and accepts Bitcoin payments.

BitcoinStore

It is an online marketing place that is cheaper than most of the sites. Wondering about the best part about this? They accept Bitcoin!

Coingig

It’s an online marketplace that only accepts Bitcoin.

BitFash

It works as an intermediary, and gives you the flexibility of buying from brands.

Kickass Kombat

They sell martial arts weapons and accept Bitcoin payments.

Virgin Galactic

They aim to promote space tourism and just announced that they will be accepting Bitcoin.

PizzaForCoins

Now you can order your favorite pizza and pay PizzaForCoins in Bitcoin, who will order the pizza for you.

Nestorgames

It is an independent board game manufacturer where you can use Bitcoin to purchase bundles and also get a 10% discount.

BooshWorks

They offer printing services and accept US dollars and Bitcoin.

Bitcoin Apps

Best Apps for Android

Here are some of the best apps for Android:

zTrader- Price: Free with in-app purchases

Mycelium Bitcoin Wallet- Price: Free

Cryptonator- Price: Free

Crypto Miner Pro- Price: $2.28

Coins.ph Wallet- Price: Free

Blockfolio- Price: Free

Bitcoinium- Price: Free / $2.98

Bitcoin Wallet- Price: Free

Bitcoin Ticker Widget- Price: $0.99-$14.99

Bitcoin Checker- Price: Free

Best Apps for iPhone

The best apps for iPhone are:

Stocks- Price: free

CoinCap- Price: free

CoinATMRadar- Price: free

Block chain Bitcoin Wallet- Price: free

Bitmap- Price: free

What Is Bitcoin Mining?

Mining is the process of adding transaction records to Bitcoin’s public ledger of the past transactions. The past ledger of transactions is referred to as block of chains and is used to confirm the transactions to the network where it has taken place. As a precautionary measure nodes are used that can differentiate between actual Bitcoin transactions and from scam attempts that are done to re-spin the coins that have been used in other places. Mining is designed in a way that it has become resource extensive and difficult because they want the number of blocks that are found everyday by the miners to remain stable. The individual blocks are a proof of work that are considered to be valid and is verified by the nodes every time they receive a block.

The main purpose of mining is to allow Bitcoin nodes to have a consensus that is tamper resistant. Miners are actually paid a fee and a subsidy for the new coins that are created. This helps in disseminating the coins in a decentralized manner and coaxes the people to provide additional security for the system.

One easy way to grasp this little complicated process is to think of mining as gold mining. Why? Because bitcoins, just like precious metals are also limited in quantity because the set limit for bitcoins is 21 million and the more it is taken, the more difficult it becomes to find it. One important thing to know is that mining doesn’t necessarily result in a bitcoin but they are given to miners as a reward for validating the transactions that were done previously.

In order to bitcoin people need a desktop computer as well as a special program. Miners compete with other miners in solving mathematical problems and they work on a block with the help of cryptographic hash functions.

Learning about Hash Functions

A hash function is a one way encryption that works without a key. It works by taking an input and in return it gives a fixed length hash value. If any character of the original input would be changed, you will get a completely different hash value. Since it functions like this, it is extremely hard to determine the output but the hash functions can be used as a proof of validation as well as work. The bitcoin miners work to locate that input that will give the specific hash value, which will be a number with multiple zero at the beginning. These are very complicated, but that makes it difficult for miners to cheat on other people because a guess game can’t be used.

Miners keep on using their computer until they have a hash value that is close to the target. If you are the first person to do this, then you are the person who has mined the value. The person, who accomplishes this, will get a reward of 12.5b bitcoins. Though it’s true that the winner doesn’t actually make the bitcoin, but the coding of the algorithm is set to reward the person for doing the mining as well in helping to verify the block chain.

All the blocks are created in a line and this also includes the hash of the previous block. It is important you know that all the blocks have a hash of the prior blocks, so that it can be proved that its positioning is later in the sequence. A lot of times, the competing blocks are created by different miners but they contain different transactions of the bitcoins that are spent in different places. The block that has the largest proof of work is picked for the block chain. This is done in an attempt to validate the transactions because it is hard for another person to come up with another block of chains and then they would have to convince everyone else that their work is right because it has the proof of work. One thing that the Bitcoin community fears is that one person or a group will be able to get 51% hold of the block chain and would use that to their advantage.

Bitcoin miners love cryptography and they generally have a spare computer to validate the block chain and earn the reward. Since the value of the bitcoin has gone up, people see it as a business and have started investing in it. They have warehouses in areas were the electricity prices are low so that they can cut the costs. It may be difficult to get profit from mining, but there are a lot of people that do it as a hobby.

Block Reward

The number of bitcoins released with each mine block is known as the block reward and it is halved every 210,000 block or four years. The whole thing started in 2009n with 50 bitcoins and then reached 25 in the year 2015. The lessening number of block rewards will reach a total release of bitcoins that will approach 21 million. Block rewards works as a great incentive for most of the miners and the transaction fee for this is said to represent 0.3% of the revenue of mining.

Transaction Fees

It is seen that the block reward is diminishing with the passage of time and soon the number will reach zero, which means that there will be less incentive for people to mine the bitcoin in order to get the block reward. This can be a security threat for the entire system because the incentives that will be provided with the block reward will be replaced with the transaction fee.

The transaction fee is a little amount of the bitcoin that is included in the bitcoin and is given as a reward to the miner, who mines the block in which the transaction is included. The transaction fee is mandatory for the person doing the transaction. So, the transaction fee can be used by the miners in order to verify their transactions. The bitcoin client, which was released by the team to send the transactions have a minimum fee rule that is applicable by default.

Mining Difficulty

It is often asked that how hard is it to mine the bitcoins. The answer is that it depends on the kind of effort that is being put in across the network. The software has a set protocol laid according to which the network adjusts the difficulty of the mining at 2016 blocks or every two weeks approximately. It adjusted so that the rate of the discovery of the block remains constant. So, if there is computational power used in mining, then the difficulty will be adjusted and the mining will become even more difficult. Similarly, if the computational power is nit used, just the opposite happens and the mining gets easier. High difficulty means less profit for the miners, which is the reason why if there will be more mining; it will be less difficult for all the participants. The total payout will depend on the following things:

Block reward

People mining

Price of Bitcoin

Size of the transaction fees

Mining Hardware

Anyone that has the right hardware, a powerful software, and access to the internet can be a part of the mining. In the beginning, mining was done with the help of CPUs of desktop computers. It was seen that the graphics processing units (GPUs) or the graphic cards were much more effective than simple CPUs and that is how they gained popularity. With time, a hardware called ASIC (Application-Specific Integrated Circuit) came into being and became popular, since it was especially made for bitcoin mining. The hardware was released in 2013 and it was has been improved since and constant upgrades are introduced to the market.

Since bitcoin has become so popular, mining has become hard and it can be only be profitable if you use the latest version of ASIC. The older version of ASIC, CPUs and the GPUs incur an energy cost that is much more than the revenue generated. With the ASIC available today and the number of participants entering the market the difficulty has shot up. The activity has been incentivized by the increase of price and it is said that the price will further increase. There is also a power within the system that has a controlling factor and gives a vote about whether to accept the changes in the protocol or not. Some of the companies that make the hardware are:

Bitfury

Butterfly Labs

CEX.io

CloudHashing

HashFast

KnCMiner

MegaBigPower

Mining Pools

As mentioned above, mining rewards are given to the miner who discovers the solution because it increased the possibility that that there will be a participant who will discover a solution that will be equal to the portion of the total mining power of the network. Users that have a small percentage of the mining power have a very little change of finding the next block on their own. For example if a person will buy one mining card for a few thousand dollars that will still be a very small fraction of the total mining power. Since there is a slim chance of finding the next block, it takes time for the miner to find the block and that raises the level of difficulty. This is a problem and the solution is mining pools because they are operated by a third party that is in touch with the group of miners. They work in a group and distribute the payouts so that the miners have bitcoins when they activate their miners.

Electricity Costs

The main costs that the miners have to take care of are the cost of electricity as well as the hardware for doing mining as well as for cooling and ventilation. Some investors have opened up their warehouses in places where the electricity is affordable. The biggest mining operation is located in North America, in the Columbia River in Washington and it is run by the MegaBigPower. The reason why this location was chosen was there is ample hydroelectric power and the electricity prices are extremely low in the country. Another popular location is in Iceland and is run by CloudHasing. The electricity in the area is generated from geothermal as well as hydroelectric source. These resources are not only cheap but they are renewable as well.

Regulation

The IRS issued a tax guidance according to which the income that is generated with the help of mining is counted as a self employment income and tax will be applicable in it. FinCEN, the Financial Crimes Enforcement Network, which is a part of the U.S Treasury, analyzed the financial transactions so that crimes like terrorist financing as well as money laundering can be controlled. The FinCEN has also given a guidance clarifying that the miners are not considered as Money Transmitters under the Bank Secrecy Act and similarly, the cloud mining services will not be counted as Money Transmitters.

The bitcoins are brought into circulation with the help of bitcoin mining. The miners compete against each other in an attempt to deploy the latest bitcoin mining chips and choose to function in places where the electricity is cheap because more computing power keeps the profitability in check.

How to Start Mining?

Bitcoin mining consists of miners and the network compensates them by releasing the bitcoin for the people that contributed to the computational power. The compensation comes in the form of newly issued bitcoins as well as the transaction fee that is included in the transactions that are validated during the mining. Now that you know so much about mining, this chapter will discuss how you can you start mining.

Step One- Get the Bitcoin Mining Hardware

There are a few cases in which you can buy the hardware with the help of bitcoins, but an easy way out is to purchase it on Amazon. You can also have a look at the bitcoin charts.

Earlier the mining process was done with the help of a video processor card or a CPU but that may not be possible today. The Bitcoin ASIC chips are great because they offer a performance that is much better than the old systems that were used in the earlier days. Anything other than this uses a lot of electricity and processing power, which means that you can’t maximize profit. There are several companies out there which offer great systems that are especially made for bitcoin mining. Another great option is to use cloud mining contracts that simplify the process but may increase the risk.

Hashflare Review

The Hashflare offers SHA-256 mining contracts and this can be mixed with the automatic payouts, but the customers have to buy at least 10 GH/s.

Genesis Mining Review

Genesis Mining has the honor of being the largest cloud mining provider and has three differently priced plans.

Hashing 24 Review

This has been functional since 2012 and uses the ASIC chips so that it can deliver maximum performance and can be efficient as well.

Minex Review

It is an aggregator of block chain and helps with the stimulation of the game format. People use cloudpacks that are used to build an index from pre-picked sets of real world markets.

Minergate Review

It offers mining and cloud services for Bitcoin.

Hashnest Review

This is operated by Bitmain and uses more than 600 Antminer S7s for rent. The rate of the 600 Antminer S7s as of now is $1200.

Bitcoin Cloud Mining Review

All their contracts are currently sold out.

NiceHash Review

It helps in connecting Bitcoin service buyers with sellers.

Eobot Review

This is great for newbies because they can start bitcoin mining for as little as $10.

MineOnCloud Review

It has 35 TH/s of mining equipment for rent.

Bitcoin Mining Hardware

Some of the best bitcoin hardware based on the price and the efficiency are:

AntMiner S7

AntMiner S9

Avalon6

Before getting into this, it is important that you learn whether the mining will be profitable for you or not. The best way to go about is to use the mining calculator because you will only have to enter the data of the Bitcoin miner that you plan on buying, and it will tell you how long will it take for you to make a profit. However, one thing is for sure,- you need a few hundred dollars to get started. You can also read different reviews in order to understand which miner will be best for you.

Step Two – Download the Mining Software

After getting the hardware it is time to use the special program and use that for mining. There are several programs that can be used for mining but the most famous ones are CGminer and BFGminer. These are command line programs but are easy to learn.

Step Three – Join a Bitcoin Mining Pool

The next step is to use a bitcoin mining pool as they are groups of bitcoin miners that work together to solve a block and then share the profit. Without a pool, you might never be able to earn bitcoins for a very long time, plus in a pool it is convenient to share the work and split the profit. If you want a decentralized pool, you should checkout p2pool. Some of the other pools that fully validate the blocks are:

BitMinter

CK Pool

Eligius

Slush Pool

Questions to ask

Before joining a pool there are some important questions that you need to ask:

What will be the reward method? Some of the common ones are Pay per Share, Score Based, Proportional, and PPLNS.

What is the fee that is charged for mining and what do they charge for withdrawal of the funds?

How frequently is a block found? This is important, as you will be rewarded according to it.

How can you withdraw the funds?

Do they provide any sort of stats?

Is the pool stable enough to join?

Make sure that you do thorough research before joining a pool.

Step Four- Get a Bitcoin Wallet

You need to get a bitcoin wallet because that will be the place where you will be receiving the bitcoins that you mine. A bitcoin wallet is just like an ordinary wallet but you have the flexibility of choosing a mobile, software, or a web based one. The bitcoins are sent to the wallet with the help of a unique address that only belongs to you. When you are setting up the bitcoin wallet, the most important part is to save it from the potential threats with the help of a two factor authentication or by keeping it offline so that there is no access to the Internet. You can get a wallet by downloading software to your computer.

Different Kinds of Wallets

Some of the different kinds of wallets are:

Bitcoin hardware wallets

Online bitcoin wallets

Software wallets

Factors to Consider

When choosing between the wallets, you have to take the following factors into consideration:

Amount

Frequency of payments

On the go feature

Use combinations

List of Best Wallets

Some of the wallets that you should check out are:

Universal Wallets

Copay

Hardware Wallets

Ledger HW.1

Ledger Nano

Ledger Unplugged

OPENDIME

TREZOR

Online Bitcoin Wallets

GreenAddress

SpectroCoin

Mobile Wallets for Android

Airbitz

Bitcoin Wallet

GreenBits

Mycelium (Android)

Mobile Wallets for iOS

Airbitz

breadwallet

Copay

Desktop Wallets

Armory

Bitcoin Core

Electrum

MultiBit HD

Things to Do

Here are some of the practices that you should do:

Control your private keys

Create multiple secure backups

Don’t reuse addresses

Protect your privacy

Use different wallets for different sums of money

How to Store Bitcoins

Here is how you can store the bitcoins in the wallet:

Cold Storage

Custodial Services

Hot Wallets

Multisignature Wallets

Step Five- Start mining

Now that you know all the steps, you are prepared to start mining. You can connect your miner to a power outlet and then check whether it is connected to the computer via a USB or not. After doing this, you need to open the mining software and then enter the mining pool with the help of the user name and the password. After this is done, you can start mining for bitcoins.

Stay Up To Date with Bitcoin News

The world of bitcoin keeps changing, so it is important for you to stay updated if you want to maximize your profits. It is important you know that bitcoin mining is not something that everyone can do, so perhaps it will be easier to purchase the bitcoins with money because sometimes that has a higher return on investment than simple mining.

Technical Details

Bitcoin Mining Hardware Guide

Earlier on, miners used to use CPUs to mine but since they were not fast enough, they moved to graphical processing unit (GPU) because that was able to hash data at a faster rate and used less power as well. The bitcoin mining devices were very easy to use and were based on field-programmable gate array (FPGA) processors and were attached to the computers with the help of a USB connection.
Today miners use bitcoin mining hardware like the Application-specific integrated circuit (ASIC) miners and are mined at unprecedented speeds without using too much electricity. Most of the companies have used innovative technology to make excellent products.

Bitcoin Mining Hardware Comparison

Some if the best hardware based in the electrical efficiency and price per hash are:

AntMiner S7

BTC earned per month: 0.1645

Capacity: 4.73 Th/s

Efficiency: 0.25 W/Gh

Guide: Yes

Price: $479.95

Weight: 8.8 pounds

AntMiner S9

BTC earned per month: 0.3603

Capacity: 13.5 Th/s

Efficiency: 0.098 W/Gh

Guide: Yes

Price: $2,279.95

Weight: 8.1 pounds

Avalon6

BTC earned per month: 0.1232

Capacity: 3.5 Th/s

Efficiency: 0.29 W/Gh

Guide: No

Price: $499.95

Weight: 9.5 pounds

Best Bitcoin Mining Hardware

Two important factors go in the making of bitcoin mining hardware:

The cost

The electrical efficiency

ASIC Bitcoin Mining Hardware

The Application-specific integrated circuit chips (ASICs) is a Bitcoin mining hardware that was created to solve the Bitcoin blocks and uses much less energy compared to GPUs, CPUs and FPGAs. Bitcoin mining has started gaining a lot of popularity and this has caused a rise in the value of the ASIC Bitcoin mining hardware. If the software is used to secure the Bitcoin network the level of difficulty rises. This makes it hard to compete for profit without the Bitcoin ASIC system. The ASIC technology is getting faster, more efficient, as well as productive, which makes it great software. Some of the popular models are:

VMC PLATINUM 6 MODULE

BTC Garden AM-V1 616 GH/s

Avalon 2, Avalon 3

ASICMiner BE Tube

ASICMiner BE Prisma

Antminer U3

Antminer S5

AntMiner U2

Capacity: 2 Gh/s

Efficiency: 1.0 W/Gh

Weight: 0.8 ounces

Guide: Yes

Price: $49.66

BPMC Red Fury USB

Capacity: 2.5 Gh/s

Efficiency: 0.96 W/Gh

Weight: 1.6 ounces

Guide: Yes

Price: $44.99

GekkoScience

Capacity: 9.5 Gh/s

Efficiency: 0.33 W/Gh

Weight: 0.8 ounces

Guide: Yes

Price: $49.97

List of Mining Hardware

Miner

Capacity

Efficiency

Price

AntMiner S1

180 Gh/s

2.0 W/Gh

$299.0

AntMiner S2

1000 Gh/s

1.1 W/Gh

$2259.0

AntMiner S3

441 Gh/s

0.77 W/Gh

$382.0

AntMiner S4

2000 Gh/s

0.7 W/Gh

$1400.0

AntMiner S5

1155 Gh/s

0.51 W/Gh

$370.0

AntMiner S5+

7722 Gh/s

0.44 W/Gh

$2307.0

AntMiner S7

4.73 Th/s

0.25 W/Gh

$479.95

AntMiner S9

13.5 Th/s

0.098 W/Gh

$2,279.95

AntMiner U1

2 Gh/s

1.25 W/Gh

$29.0

AntMiner U2

2 Gh/s

1.0 W/Gh

$49.66

AntMiner U3

63 Gh/s

1.0 W/Gh

$38.0

ASICMiner BE Blade

11 Gh/s

7.72 W/Gh

$350.0

ASICMiner BE Cube

30 Gh/s

6.67 W/Gh

$550.0

ASICMiner BE Sapphire

0 Gh/s

7.59 W/Gh

$20.0

ASICMiner BE Tube

800 Gh/s

1.13 W/Gh

$320.0

ASICMiner BE Prisma

1400 Gh/s

0.79 W/Gh

$600.0

Avalon Batch 1

66 Gh/s

9.35 W/Gh

$1299.0

Avalon Batch 2

82 Gh/s

8.54 W/Gh

$1499.0

Avalon Batch 3

82 Gh/s

8.54 W/Gh

$1499.0

Avalon2

300 Gh/s

N/A

$3075.0

Avalon3

800 Gh/s

N/A

N/A

Avalon6

3.5 Th/s

0.29 W/Gh

$499.95

bi*fury

5 Gh/s

0.85 W/Gh

$209.0

BFL SC 5Gh/s

5 Gh/s

6.0 W/Gh

$274.0

BFL SC 10 Gh/s

10 Gh/s

N/A

$50.0

BFL SC 25 Gh/s

25 Gh/s

6.0 W/Gh

$1249.0

BFL Little Single

30 Gh/s

N/A

$649.0

BFL SC 50 Gh/s

50 Gh/s

6.0 W/Gh

$984.0

BFL Single ‘SC’

60 Gh/s

4.0 W/Gh

$1299.0

BFL 230 GH/s Rack Mount

230 Gh/s

N/A

$399 (used)

BFL 500 GH/s Mini Rig SC

500 Gh/s

5.4 W/Gh

$22484.0

BFL Monarch 700GH/s

700 Gh/s

0.7 W/Gh

$1379.0

BitFury S.B.

N/A

N/A

N/A

Bitmine.ch Avalon Clone 85GH

85 Gh/s

7.65 W/Gh

$6489.0

Black Arrow Prospero X-1

100 Gh/s

1.0 W/Gh

$370.0

Black Arrow Prospero X-3

2000 Gh/s

1.0 W/Gh

$6000.0

Blue Fury

3 Gh/s

1.0 W/Gh

$140.0

BTC Garden AM-V1 310 GH/s

310 Gh/s

1.05 W/Gh

$309.0

BTC Garden AM-V1 616 GH/s

616 Gh/s

1.05 W/Gh

$350.0

CoinTerra TerraMiner IV

1600 Gh/s

1.31 W/Gh

$1500.0

Drillbit

N/A

N/A

N/A

HashBuster Micro

20 Gh/s

1.15 W/Gh

$688.0

HashBuster Nano

N/A

N/A

N/A

HashCoins Apollo v3

1100 Gh/s

0.91 W/Gh

$599.0

HashCoins Zeus v3

4500 Gh/s

0.67 W/Gh

$2299.0

HashFast Baby Jet

400 Gh/s

1.1 W/Gh

$5600.0

HashFast Sierra

1200 Gh/s

1.1 W/Gh

$7080.0

HashFast Sierra Evo 3

2000 Gh/s

1.1 W/Gh

$6800.0

Klondike

5 Gh/s

6.15 W/Gh

$20.0

KnCMiner Mercury

100 Gh/s

2.5 W/Gh

$1995.0

KnC Saturn

250 Gh/s

1.2 W/Gh

$2995.0

KnC Jupiter

500 Gh/s

1.2 W/Gh

$4995.0

KnC Neptune

3000 Gh/s

0.7 W/Gh

$12995.0

LittleFury

N/A

N/A

N/A

Metabank

120 Gh/s

1.42 W/Gh

$2160.0

NanoFury / IceFury

2 Gh/s

1.25 W/Gh

N/A

NanoFury NF2

4 Gh/s

1.35 W/Gh

$50.0

BPMC Red Fury USB

2.5 Gh/s

0.96 W/Gh

$44.99

ROCKMINER R3-BOX

450 Gh/s

1.0 W/Gh

$200.0

ROCKMINER R4-BOX

470 Gh/s

1.0 W/Gh

$210.0

ROCKMINER Rocket BOX

450 Gh/s

1.07 W/Gh

$599.0

ROCKMINER R-BOX

32 Gh/s

1.41 W/Gh

$65.0

ROCKMINER R-BOX 110G

110 Gh/s

1.09 W/Gh

$88.0

ROCKMINER T1 800G

800 Gh/s

1.25 W/Gh

$325.0

Spondooliestech SP10 Dawson

1400 Gh/s

0.89 W/Gh

$2845.0

SP20 Jackson

1.3-1.7 Th/s

0.65 W/Gh

$248.99

Spondooliestech SP30 Yukon

4500 Gh/s

0.67 W/Gh

$4121.0

Spondooliestech SP31 Yukon

4900 Gh/s

0.61 W/Gh

$2075.0

Spondooliestech SP35 Yukon

5500 Gh/s

0.66 W/Gh

$2235.0

TerraHash Klondike 16

5 Gh/s

7.11 W/Gh

$250.0

TerraHash Klondike 64

18 Gh/s

7.06 W/Gh

$900.0

TerraHash DX Mini (full)

90 Gh/s

7.11 W/Gh

$6000.0

TerraHash DX Large (full)

180 Gh/s

7.11 W/Gh

$10500.0

Twinfury

5 Gh/s

0.85 W/Gh

$216.0

Avalon USB Nano3

3.6 Gh/s

0.85 W/Gh

$55.0

GekkoScience

9.5 Gh/s

0.33 W/Gh

$49.97

Bitcoin Mining Software

Bitcoin mining hardware may handle the entire mining process but the mining process is equally important.

If you are a solo miner, the software will help you to connect with the block chain .

If you are mining with a pool, the software will connect you to the mining pool.

If you are connected to cloud mining, there is no need to get the mining software.

Importance of Bitcoin Mining Software

The software helps to deliver the hardware’s work to the rest of the bitcoin network and to get the completed work from other miners of the network. The software basically monitors the input and output while displaying the following stats:

Speed of the miner

Hashrate

Fan speed

Temperature

Bitcoin Wallets

One very important thing that you will need is the wallet because the software will ask you about the address in order to send you the rewards and the payouts. Once you will download the wallet, you will get the Bitcoin address for the wallet. There are several kinds of bitcoin wallets but some of the recommended ones are:

Breadwallet- This is recommended for iOS.

Electrum- This works for Linux, Mac as well as Windows

Mycelium- This is recommended for Android.

If you think that you will be earning a lot of money from bitcoin mining, it is recommended that you get a more secure wallet which is the hardware one.

Bitcoin Mining Software for Windows

Bitcoin Miner

The Bitcoin Miner can be used for Windows 8.1 and Windows 10 and the latest version of this software is Bitcoin Miner 1.27.0. Some of its great features are:

A power saving mode.

An easy to use interface.

Fast share submission.

Mining pool support system.

Profit sharing system that allows you to know whether mining is profitable or not.

BTCMiner

BTCMiner is an Open Source Bitcoin Miner for ZTEX USB-FPGA modules 1.5. Some of its noticeable features are:

Dynamic frequency scaling in which the BTCMIner chooses the frequency of the highest rate of valid hashes.

It has a ready to use Bitstream for which you don’t need any software or license.

It also has a FPGA board that has a USB interface that is used for programming and communication.
Download BTCminer here.

CGMiner

This is one of the most commonly used software that most of the miners are using at the moment. One of the reasons why people prefer it is that it uses the original code of the CPU miner. Some of the most noticeable features are:

CPU mining support

Fan speed control

Multi GPU support

Remote interface capabilities

Self-detection of new blocks with the help of the database

BFGMiner

This is very similar to the CGMiner. The only difference is that it does not focus on the GPUs like the CGMiER but it has been designed for the ASICs. Some of the most noticeable features are:

ADL device reordering by PCI bus ID

Fan control

Integrated overclocking

Mining with free mesa/LLVM OpenCL

EasyMiner

EasyMiner is also similar to the BFGMiner and CGMiner and is GUI based. It supports the getwork mining protocol and the stratum mining protocol, which means that it can be used for pooled as well as solo mining. Some of its notable features are:

It configures miner

It gives performance graphs of the mining activity which makes it easy to understand

Bitcoin Mining Software for Linux

CGMiner
CGMuiner is the preferred choice for Linux as well and is used extensively in the mining world. It is preferred by the people because of the original support of the CPU miner. Its famous features include the following:

BFGMiner

It seems like most of the software can be used for windows as well as Linux. This is also similar to the CGMiner and doesn’t focus GPUs like the CGMiER but has been especially made for ASICs. Some of the features that you should know about are:

Poclbm

DiabloMiner

Bitcoin Mining Software for Mac OS X

RPC Miner

Top Bitcoin Mining Machines You Should Know About

If you are not comfortable with online bitcoin exchanges, you should invest in a Bitcoin mining machine. Let’s have a look at some of the best ones:

Fast-Hash One

There are three Fast Hash One models that includes:

Silver Edition- powered by a 64 GH/s module

Gold Edition- powered by a 128GH/s module

Platinum Edition- 256 GH/s module

The main differences between all of these models lie in the expandability and power. The price range from $2,499 – 5,999 for base units and can help in earning 0.2 up to 0.85 Bitcoins a day. Learn more about the Fast-Hash One series here.

CoinTerra TerraMiner IV

This is powered by CoinTerra’s own in-house ASIC chips that are known as the GoldStrike I. It has four four ASIC chips that can earn you 1.1 Bitcoins a day. The price of the machine is $5,999. Learn more about the CoinTerra’s TerraMiner IV here.

Hashfast Sierra

The hashtag sierra is powered by three Golden Nonce ASIC chips and has a nominal hash rate of 1.2 TH/s. It can earn you 0.66 Bitcoins a day and is priced at $6,300. Learn more about the Hashfast’s Sierra here.

Black Arrow Prospero X-3

The Black Arrow Prospero X-3 is powered by 20 Black Arrow Minion ASIC chips that give a hash rate of 2TH/s. It can help in earning 1.1 Bitcoins per day and is priced at $6,999. Learn more about the Black Arrow’s Prospero X-3 here.

KnCMiner Neptune

The KnCMiner Neptune boasts of four modular 20nm ASIC board that give a hashing speed of 3TH/s. You can earn 1.66 Bitcoins a day and the machine is priced at $12,995. Learn more about the The KnCMiner Neptune here.
Wondering where you can buy Bitcoin machines from? Click here to get all the information.

Frequently Asked Questions

Now that you know this, let’s move on to the frequently asked questions about bitcoin mining:

Can I make money with Bitcoin?

Bitcoin will not make you rich overnight because it is an emerging technology and it is important to understand the basic economic rules. Bitcoin is an innovative technology that is opening up so many possibilities for the people that also includes some risks. There are ways to make money with Bitcoin with the help of speculation as well mining. It is recommended that people evaluate all the risks and costs before taking a decision.

Is Bitcoin anonymous?

There is an acceptable level of privacy for all the transactions made. It is not completely anonymous like cash transactions but it does offer good privacy. The use of Bitcoin leaves public records but there are mechanisms that protect privacy.

What happens when bitcoins are lost?

If a person loses their wallet, it has the same effect as removing the money from circulation. All the lost Bitcoin are a part of the block chain but the lost ones become dormant since no one knows the private keys that could be used to spend again.

Can Bitcoin become a payment network?

The Bitcoin network has a large number of transactions per second and they are still working to remove the limitations and fulfill the future requirements. The continuing optimization and specialization has made it a specialized payment network.

What decides Bitcoin’s price?

Bitcoin’s price highly depends on supply and demand. If the Bitcoin demand increases the price will increase and vice versa. There are few Bitcoins in circulation but new Bitcoins are being created at an accelerated rate, which means that a certain level of inflation has to be followed to keep the price stable. Since the Bitcoin market is small it would take a significant amount to make any change.

Is Bitcoin a bubble?

A rise in the price does not constitute of a bubble but an over evaluation that leads to a downward direction can constitute of a bubble. These choices are based on human action that causes the price to fluctuate as the market seeks price discovery.

Will Bitcoin fall in a deflationary spiral?

According to the spiral theory if the prices fall, people will move the purchases in future in order to get a benefit from the prices. The fall in demand will cause the sellers to lower the price to stimulate the demand. Bitcoin is not like fiat currency so it was not designed as a deflationary currency. However it will be factually correct to say that it will remain stable.

Can someone buy all the existing Bitcoin?

This may not be possible because only a few Bitcoin are available for sale and the price will change according to the supply and demand.

How much will the transaction fee be?

The transactions are processes without any fee but for that the user will have to wait for a few days or weeks. The fees may be subjected to change but normal fee is a small amount. The transaction fee is basically applied to give protection to the miners and to secure the network.

Will I get a Bitcoin if my computer is powered off?

Yes, you can as you will see the Bitcoin whenever you will see the wallet application. They appear on the public ledger that is shared with all the devices on the network. Whenever you will turn your computer on, you will see the Bitcoin.

What does “synchronizing” mean?

Long synchronization is only needed with full node clients. It is the process of downloading and verifying all the transactions in the network.

How does mining help secure Bitcoin?

Mining is the same like lottery an it is not easy for people to add new blocks of transactions in the block chain. This protects the entire network by preventing any individual from getting the power to block the transactions. It also prevents any individual from replacing parts of their block chain.

Is Bitcoin vulnerable to quantum computing?

Yes, it relies on crypto currency. Quantum computers don’t exist yet and if they will be invented the protocol of Bitcoins will be upgraded accordingly.

What are the risks involved when I purchase Bitcoin with credit cards?

It is important that you choose companies that have a great reputation as well as a regulatory compliance. The above mentioned companies are all reliable when it comes to buying and selling of Bitcoin with credit card. All the personal information associated with it is sensitive information that can result in identity theft, therefore, make sure you use a website that is secure. Other than this, the charges that are classified as cash advances in which case different fees and policies can apply. So, make sure that you are familiar with your credit card company and how they handle Bitcoin.

Why should I buy Bitcoin with credit cards?

If you want speed and convenience, you should buy Bitcoin with a credit card or a debit card. This is just like doing online shopping that a lot of people are familiar as well as comfortable with.

Are there any disadvantages of doing so?

Using credit cards to purchase Bitcoin may be fast and convenient, but purchasing it in large amounts can be difficult as well as pricey because of the transaction and the processing fee. Furthermore, the risk of fraud is also high if one is not careful.

Can I purchase Bitcoin on multiple exchanges if the limits are low?

Yes, you can do that but the limits are very low and can be like $50 per day. So if you want to purchase from multiple places, you will have to gather a large amount.

Is it difficult purchasing Bitcoin with a credit card only once?

Bitcoin transactions are irreversible so merchants generally have to wait up to a month to receive the cash after the payment of the credit card. So since the whole process is irreversible, the selling of Bitcoin can be extremely risky due to fraud. Thankfully, there are some fraud prevention techniques that help. You can set up an account Bitcoin provider like purse that would accept payment gift cards in order to buy the Bitcoin. These payment cards are extremely helpful because they can be used for exchanging Bitcoin when other options are not available.

Is it risky to show identification documents when purchasing Bitcoin?

Yes, purchasing Bitcoin from regulatory compliant Bitcoin exchange is quite risky. Don’t do it unless you are absolutely sure that they will handle all your documents carefully and will respect your security as well as privacy. Furthermore, the online service provider can get hacked, and your information can get stolen.

After I buy Bitcoin should I store them on the exchange?

It is highly recommended that you don’t do that as storing the Bitcoin in the wallet is the safest way to go about. When you purchase Bitcoin, you should immediately move them to a safe location so that you have absolute control. People have lost hundreds of dollars just because their Bitcoin exchanges got hacked and that is how they lost the customer funds as well. All this can be prevented if you control the private keys yourself and don’t share this information with anyone else.

Conclusion

Advantages of Bitcoin mining

By now you know all the important details about bitcoin mining. Before moving towards the frequently asked questions, it is important to take into account all the advantages of bitcoin mining. Here are some of them:

You will have freedom of payment because you will control your own money.

The security condition is great and your transactions will be safe.

Most of the information is transparent but the personal information will remain hidden.

People can verify the transaction with the help of the bitcoin block chain.

The fee for bitcoin payments is extremely low.

The risk for merchants is low but it is important to know that a transaction can’t be reversed.

There are no third party seizures since it is decentralized.

There are no taxes involved.

There is no tracking involved.

There are no transaction costs.

There is no risk of charge backs.

Bitcoin was the strongest currency consecutively for in 2010, 2011, 2012 and 2013. In the year 2015 and 2016, the bitcoin was priced at $700 per piece. The reason why people trust this is that there money is not controlled by a third party. People are readily accepting bitcoins as payments, so it is safe to assume that we are moving towards a cashless future.

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